Carole Cran is CFO at Forth Ports and Non-Executive Director at Halma plc. Here, she shares why boards need to get more comfortable asking questions they might not like the answer to. This interview was conducted as part of our research inquiry into the role CFOs play in creating a fairer future.
I expect that all CFOs spend time on hygiene factors that are fundamental to the role, regardless of which organisation you’re in. You’re responsible for or involved in the financial reporting, the control environment, often the risk management framework, investment decisions, and the overall strategic plan. However, I’d say that these basics encompass only about 20% of my role, and the great bulk of my time is spent working on our broader strategic topics. In fact, I would say that first and foremost I think of myself as an executive director and secondly as the CFO.
“First and foremost I think of myself as an executive director and secondly as the CFO.”
I also don’t think I have any especial responsibility when it comes to fairness or sustainability: I think of them as business issues to address. The six of us on the executive team take a collective responsibility for these issues; it doesn’t sit exclusively in anyone’s hands.
I think the CFO has an opportunity to act as a catalyst for all sorts of activity happening around the business. Instead of saying something is simply unaffordable and moving on, you can recognise what the proposal is trying to achieve and exercise the art of the possible, while establishing what can realistically be achieved.
Often, there’s an assumption that doing things sustainably or in a more equitable manner is more expensive. But that’s not necessarily the case and the CFO can leverage their position to give these projects the go-ahead when they make sense. For example, a while ago we were looking at installing solar panels on a new warehouse in one of our ports, and the initial reaction from our engineers was that it would be immensely difficult to do and prohibitively expensive. We decided to go and check it out, and discovered that, in practice it wouldn’t be as difficult as feared. Once you factor in the savings we make by generating our own electricity renewably, it’s a much better deal than if we’d just gone down the traditional route. So, I think there is a real opportunity for CFOs to be encouraging initiatives like that and catalyse them.
We make use of the usual non-financial metrics, for example around employees and the number of skills that we have per employee, apprenticeship programmes, and how we work with the local community. We also track metrics around sustainability, like our scope 1, 2, and 3 emissions.
The aspect we haven't fully addressed yet is viewing it as an interconnected ecosystem. Whilst we make efforts in terms of the community, our workforce, and our commercial activities, we haven't yet cracked how we measure and understand the broader impact we have on the areas around our ports and its community, where many of our people reside. It's crucial to understand what matters to them and how we work well with the city council and marine bodies responsible for the area.
Our approach encompasses all these elements. For significant projects we prioritise extensive consultation with statutory bodies. We collect data on various aspects, like local birdlife, to ensure informed decision-making on our environmental impact. The essence of our big projects lies in this comprehensive approach, along with meaningful engagement with the local community.
“The essence of our big projects lies in this comprehensive approach, along with meaningful engagement with the local community.”
Every CFO will have faced major challenges over the past few years – from the pandemic and its supply chain disruption to the war in Ukraine – and navigating those issues by understanding what they might mean for the business is exceptionally difficult.
Recently, with the ‘cost-of-living’ crisis, many CFOs will have been facing challenges ensuring that their people are able to get through it. The stakes here are high. People matters and industrial relations are never far from the executive board’s agenda, and mismanaging your response can have disastrous effects. For us, this has been less of an issue. However, we’re now at the point where 60% of our workforce is over 50 years old – which presents a different challenge around succession and in terms of ensuring we retain skills.
I think that boards and senior leadership teams are going to get much more comfortable with asking difficult questions. Crucially, they’ll need to get used to knowing that they might not necessarily like the answer, and be able to find common ground in order to address issues. We also need to become less parochial, in a sense, as to how we transition to Net Zero. At the minute it seems like everyone is doing their own thing without much coordination from the government in terms of the investment that’s needed for that transition.
Social inequality is a major concern, and it’s hard to argue against the difficulty a lot of people are facing at the moment. I don’t think this can be understated, and it’s heavily impacting people who are in work. For example, I was talking to a friend who works at an animal charity who are providing foodbanks with pet food, and the majority of people needing help are in employment.
In terms of what businesses can do to help address this, I think the answer lies in investing in education, skills, and apprenticeship programmes so that we create more opportunities for people who decide not to go to college or university. This investment is critical in ensuring that people don’t just have a job, they have a long-term career ahead of them and an upwards trajectory over the course of their working life.
“I think the answer lies in investing in education, skills, and apprenticeship programmes so that we create more opportunities for people who decide not to go to college or university.”